Yen Rises To 8-day High Against Swiss Franc

By IBT Staff Reporter On 04/09/09 AT 11:22 PM

Friday morning in Asia, the Japanese yen rose to an 8-day high against the Swiss franc. The yen also climbed to a 2-day high against the euro, while showed modest strength against the pound. Against the dollar, the yen recovered from a 2-day low during this time.

The Japanese stock market opened higher today morning, taking cues from Wall Street, where the major indices ended in positive territory following strong preliminary results from Wells Fargo for the quarter, which raised hopes that that the financials were not a lost cause, and some better-than-expected economic data.

The benchmark Nikkei 225 Index, having opened higher at 9,041 compared to its previous close of 8,916, is currently trading at 8,963, up 47.45 points or 0.53%, and the broader Topix index of all First Section Issues is gaining 4.33 points to 846. Automakers, oil stocks and exporters are advancing while financials are weaker, limiting the gains.

On the economic front, the Bank of Japan reported that M2, which measures the supply of money, increased 2.2% year-on-year during March to a daily average balance of 746.3 trillion yen. M2 rose 0.1% from previous month, the bank noted. The central bank further stated that M3, broader measure of money supply, increased 1.3% year over year during March to 1,044.6 trillion yen, and 0.1% higher from previous month.

The Bank of Japan board members suggested that growth estimates for the Japanese economy may require a downward revision, minutes from the March 17 and 18 monetary policy meeting revealed today.

The board members agreed that financial tensions are increasing again, the minutes showed, emphasizing the need for continued substantial liquidity. There remains significant uncertainty about the timetable for recovery, the minutes showed.

At the meeting, the board voted unanimously to keep the overnight call rate unchanged at 0.10 percent. The bank cut rates in December by 20 basis points to the current level - marking the first easing October 31, when the bank lowered rates by 20 basis points from 0.50 percent. That rate cut was the bank's first in seven years, and it snapped a strong of 22 consecutive meetings of keeping the rates on hold. The BoJ had kept rates unchanged since a 0.25 percent increase in February 2007.

The yen that closed yesterday's trading at 147.42 against the pound strengthened to 146.83 during early Asian deals on Friday. The near term resistance level for the Japanese currency is seen at 145.8.

To pull the slumping UK economy out of recession, the Bank of England maintained its key interest rate at record low, as expected, and decided to continue its asset purchase programme.

At the end of two-day rate setting meeting yesterday, the Monetary Policy Committee of the Bank of England decided to hold the interest rate at 0.5%. The interest rate now stands at the lowest level since the central bank was established in 1694. The BoE maintained the rate after slashing it for six straight months from 5% in September.

The MPC also decided to continue with the GBP 75 billion asset purchases programme utilizing the central bank reserves in order to boost lending. The central bank said it would take another two months to complete the asset purchase programme. Since its previous meeting a total of just over GBP 26 billion of asset purchases had been made, the MPC said.

The yen advanced against the dollar after hitting a 2-day low of 100.75 at 8:00 pm ET Thursday. As of now, the dollar-yen pair is worth 100.25, compared to yesterday's New York session close of 100.41. On the upside, 99.5 is seen as the next target level for the yen.

During early Asian deals on Friday, the yen jumped to a 2-day high of 131.57 against the euro and an 8-day high of 86.46 against the Swiss franc. If the yen climbs further, it may likely target 131 against the euro and 85.8 against the franc. The euro-yen and the franc-yen pairs were worth 132.18 and 86.86, respectively at yesterday's close.

The euro came under heavy selling after the European Central Bank said yesterday in its monthly bulletin that the world economy, including the euro area, is undergoing a severe downturn. The April bulletin was identical to the introductory statement given by the ECB President Jean-Claude Trichet on April 2, after announcing the Governing Council decision.

The French CPI for March and the industrial production report for February are expected at 2:45 am ET.

Most markets across the world are closed today in observance of Good Friday.